COMPENSATION MANAGEMENT AS A PREDICTOR OF ORGANISATIONAL PRODUCTIVITY
ABSTRACT
The study critically explored the effects of compensation management on organisational productivity. Descriptive Survey Design was adopted in the study. A total number of eighty seven (87) copies of questionnaire were administered to the respondents during the study. Chi-Square (X2) test statistics was used to test the hypotheses in order to establish the relationship between the dependents and independents variables in each hypothesis. Data analysis was carried out at five percent 0.05 (5%) level of significance. The thrust of the study was to evaluate the role ofcompensation management in organisational productivity; vis-à-vis reward system, employment benefits and compensation policies. Three (3) hypotheses were tested; and the entire alternative hypotheses were accepted; as the result showed that compensation management is a significant determinant of organizational productivity; the findings also revealed that there is a significant relationship between reward system and employees’ commitment. The study recommended that organizations should provide a compensation package that provides a competitive edge required to attract the best skills in the labor market, to retain and motivate them.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY:
The role of compensation in shaping the live of an organization cannot be overemphasized. Now, Compensation Management has been described as the development, implementation, maintenance, communication and evaluation of reward processes (Galanou et al., 2010). Ordinarily, the management of people at work is an integral part of the management process, put differently, managers need to understand the critical importance of people in their organizations so as to recognize that the human element and the organization are synonymous (Popoola et al., 2007). Therefore, it is imperative and morally worthwhile to compensate an employee with benefits if he merits it.
It is boldly put by Cascio (2003) that because of the importance that compensation holds for people’s lifestyle and self esteem, individuals are very concerned about what they are paid, while at the other hand organizations are also concerned about what they pay because it motivates important decisions of employees about taking a job, leaving a job and on the job performance. Now in a bid to define the concept of compensation, Bernadin (2007) asserts that it refers to all forms of financial returns and tangible benefits that employee receives as part of employment relationship.
In the domain of human resource management, hardly is any issue more important, relevant, and crucial to an employee than what he receives in exchange for his labour services to the organisation. In present days, among manager’s tasks is to create an environment which motivates people to perform satisfactorily and to be a profitable asset, so that they can foster the organisation’s growth. Productivity and motivation are two inseparable brothers. Motivation has been described as an accumulation of different processes which influence and direct ones behaviour to achieve some specific goals (Danich and Usman, 2010). Motivation contains those psychological processes that cause the arousal direction and persistence of voluntary actions that are goal directed (Kreiter and Kinicki, 2004). Motivation is premised on certain intrinsic, as well as extrinsic factors which in collaboration results in fully committed employees (Galanou et al., 2010).
Salaries and wages administration as well as employees’ welfare, have been the cause of incessant disputes between the employees and employers of labour. The issues range from autonomy, bad working conditions, failure to fulfill agreements, to inadequate compensation. For instance, in Lagos State tertiary educational institutions, the complaints have been the unpaid salary arrears, high handedness of governing councils, late payment of monthly salaries and allowances. For employees to be effective and efficient on their job, it is imperative for organizations and their management to come up with incentives package that promotes employees’ job satisfaction. Hence, this study will investigate the impact of Compensation Management on Organisational Productivity, with a special reference to Airtel Nigeria Ltd.
1.2 STATEMENT OF THE PROBLEM:
Compensation no doubt is a prerequisite for the growth of any organisation or even a nation. Productivity suffers a setback if compensation is poor or inappropriately used. Some of the problems associated with reward management system include the following:
· Unilateral fixing of wages and salaries:
· Poor remuneration
· Late payment of salaries and wages
· Promotion without monetary rewards
· ‘Lack of financial incentives
Owing to the high level of unemployment that has plagued the labour market, employers of labour have taken advantage of this menace by unilaterarilly fixing salaries and wages without the participation of their employees. Empirical researches also indicate that labour is largely underpriced since the numbers of job seekers are more than the number of available jobs, according to the National Manpower Board, (2009) the Nigeria labour market can barely absorb 10% of the over 3.8 million graduates turned out by the Nigeria educational system on a yearly basis.
In brief, late payment of salaries and wages, lack of financial incentives, promotion without monetary rewards are some of the dominant issues that mostly witnessed by employees in Nigeria. Sometimes, the employer proves very difficult to negotiate with. While the employee wants the highest and the best package, the employer would like to minimize cost as much as possible for profit maximization. Bad and depressed economic condition in Nigeria makes it difficult to fully implement a good compensation management system.
In organised societies, organisations regard an average worker as the root source of quality and productivity gains. Those organisations or nations do not look at capital investments but to employees, as the fundamental source of improvement (Ogunjimi et al., 2008). More so, there is an increased emphasis on people as a key source of competitive advantage, often being regarded as the key differentiator between organisations, and many managers try to comprehend the complexities of motivating people at work and provide them with fair reward so that they can gain employee commitment (Galanou, 2010). Most employers of labour in Nigeria disregard labour laws and edicts. Sometimes, this situation leaves the dejected employee with no other condition than to accept what is offered to him, otherwise, he will face unemployment consequences. Hence, this study will investigate the impact of compensation management on organisational productivity.
1.3 OBJECTIVES OF THE STUDY:
The major objective of this research is to investigate the impact of compensation management on organisational productivity. While other specific objectives include the following:
1.To examine the effect of compensation management on organizational productivity.
2.To investigate the relationship between reward system and employees’ commitment in Airtel Nigeria Ltd.
3.To determine the effect of compensation policy on industrial action in Nigeria.
4.To find out the implication of compensation management on employees’ job performance.
1.4 RESEARCH QUESTIONS:
The following are the research questions generated for this study;
1.Is there any impact of compensation management on organizational productivity?
2.What is the relationship between reward system and employees’ commitment in Airtel Nigeria. Ltd?
3.Is there any relationship between compensation policy and industrial action in Nigeria?
1.5 RESEARCH HYPOTHESES:
The researcher intends to test the following hypotheses at 0.05 level of significance.
Hypothesis One:
Ho:Compensation management is not a significant predictor of organizational productivity.
HI: Compensation management is a significant predictor of organizational productivity.
Hypothesis Two:
Ho: There is no significant relationship between reward system and employees’ commitment in Airtel Nigeria Ltd.
HI: There is a significant relationship between reward system and employees’ commitment in Airtel Nigeria Ltd.
Hypothesis Three:
Ho: There is no significant relationship between compensation policy and industrial action in Nigeria.
HI:There is a significant relationship between compensation policy and industrial action in Nigeria.